U.S. government bonds sold off again on Thursday, erasing a brief reprieve tied to a Treasury buyback pledge and pushing yields higher. The Nasdaq and S&P 500 fell as investors questioned whether the Treasury's rescue effort would hold, while oil prices and Fed minutes on inflation added to the pressure.
U.S. government bonds sold off again following a brief reprieve on Thursday, pushing yields higher and keeping stocks under pressure as investors questioned whether Treasury support measures would provide lasting relief. The moves were being closely watched to gauge markets' faith in the Treasury's ability to stem a rout that has hit multiple asset classes.
Yields resume climbing after Treasury's buyback pledge
The yield on the 30-year Treasury bond rose 5.4 basis points to 5.247%, after falling to 5.1765% earlier, a day after the Treasury pledged to buy back more longer-dated debt and stalled a sharp decline in bond prices. The 10-year yield rose 4.7 basis points to 4.7%, following a 5-basis-point fall on Wednesday, while yields on government bonds in Germany and Japan eased. According to Investing.com: Lawrence Gillum, chief fixed-income strategist at LPL Financial, said: "The buyback announcement is more of a band-aid than a panacea." He added that it still shows the Treasury is paying attention and will act to keep yields from rising too quickly.
Wall Street splits as oil and Fed minutes add pressure
U.S. stocks were mixed. The Nasdaq fell 1% and the S&P 500 dropped 0.9%. The MSCI index of global stocks rose 0.3% after falling for four straight sessions, its longest losing streak since March.
The pan-European STOXX 600 slipped 0.12%, and higher bond yields often pressure stocks. Elevated oil prices also hit sentiment, with Brent crude futures rising 2% to $93.49 a barrel as disruption in the Strait of Hormuz showed few signs of easing.
Minutes of the Federal Reserve's latest policy meeting, released Wednesday, showed concern about inflation deepened, with several policymakers appearing ready to raise interest rates if inflation does not decline to the central bank's 2% target. Semiconductor stocks rose Thursday following declines earlier in the week. Marta Norton, chief investment strategist at Empower, argued that tech companies cannot afford to pull back on AI spending regardless of where bond yields settle.
Source: Investing.com
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